Bitcoin: the new unexpected ally of Islamic finance?
The compatibility between Islamic finance and cryptocurrencies was at the center of debates at the Bitcoin Mena conference at Adnec in Abu Dhabi. A crucial question as Bitcoin now exceeds $100,000.
Understanding cryptocurrencies
Cryptocurrencies are digital currencies that use cryptography to secure transactions and control the creation of new units. Unlike traditional currencies, they operate without a central authority or banking intermediary.
Bitcoin, created in 2009 by a mysterious Satoshi Nakamoto, is the first and most famous of these virtual currencies. Its operation is based on blockchain, a distributed ledger technology that records all transactions transparently and immutably. New bitcoins are created through a “mining” process: computers solve complex mathematical problems and are rewarded in bitcoins.
Principles of Islamic finance
Islamic finance is based on strict principles: prohibition of usury (Riba), sharing of risks and profits, backing by real assets. “Both systems share a fundamental criticism of the traditional banking system,” underlines Saifedean Ammous, renowned economist. “Bitcoin is not created by debt, unlike conventional currencies. This is a crucial point for Sharia compliance.” Harris Irfan, CEO of Cordoba Capital Markets, goes further: “After 60 years of modern Islamic finance, we have only reproduced the mechanisms of conventional finance. Bitcoin could finally offer a real alternative.”
There are many points of convergence: transparency of transactions, absence of interests, direct participation of stakeholders. “This is potentially closer to the spirit of Islamic finance than our current system,” notes a DIFC expert. The traceability inherent in blockchain also meets the transparency requirements of Islamic finance. Every transaction is verifiable and immutable, which could facilitate Shariah compliance certification.
Friction areas
Yet obstacles remain. More conservative ulama point to the excessive volatility of Bitcoin and the lack of intrinsic value. “A currency must be stable and guaranteed by tangible assets,” argues a member of the Emirati Sharia Council. The speculative aspect also raises questions. Islam condemns Maysir (gambling) and Gharar (excessive uncertainty). Can the sudden variations in the price of Bitcoin be compatible with these principles?
Another sensitive point: the environmental impact of mining. Since resource conservation (Hifz al-Mal) is a fundamental Islamic principle, Bitcoin’s considerable energy consumption raises ethical questions.
Towards a synthesis?
A new generation of researchers in Islamic law offers a more nuanced reading. “Bitcoin could be considered a digital asset rather than a traditional currency,” suggests a young theologian from Al-Azhar University. Technical solutions are also emerging. Several Gulf financial institutions are developing Shariah-compliant products based on cryptocurrencies, with additional stabilization mechanisms and guarantees.
Future outlook
Islamic finance, which today weighs more than 2,000 billion dollars, is faced with a historic choice: reject this innovation or adapt it to its principles. The issue goes beyond the religious framework – it is about defining a new financial model combining ethics and modernity. Bitcoin today represents more than 40% of the total capitalization of the cryptocurrency market, estimated at around 3,000 billion dollars. Its price has experienced a spectacular increase, going from a few cents in 2009 to more than $100,000 in 2024, illustrating both its potential and its volatility. This convergence between modern technology and Islamic financial principles could well outline the contours of a new economic paradigm, where innovation and ethics would no longer be antagonistic but complementary.
